Dynamic Pricing for Internet Service Platforms with Initial Demand Constraints: Unified or Differentiated Pricing?
Year: 2025
Type: article
Abstract: Internet service platforms dynamically charge service prices to satisfy the time-varying service demand by leveraging both full- and part-time service providers. This study developed a dynamic pricing model for a monopolistic service platform under two pricing strategies: unified pricing and differentiated pricing. The model incorporates key factors such as demand fluctuations, initial demand constraints, and service quality. It proved the optimal dynamic pricing scheme aimed at maximizing the platform’s expected revenue and analyzed the equilibrium gap between the two strategies based on the optimal control theory. The results reveal the following: (a) The service quality elasticity coefficient, potential market, and demand fluctuation factor all positively affect the optimal service price under the two types of pricing strategies, whereas service quality has the opposite effect. (b) Regardless of pricing strategy, the initial service demand restriction negatively affects the optimal price of the platform. The gap between the optimal service prices under the two types of pricing strategies narrows as the potential service demand rises when customers are less sensitive to service price. (c) With initial demand restriction, the optimal service price rises over time as long as the service market satisfies specific conditions, but the expected revenue under the two types of pricing strategies evolves in significantly different trajectories. (d) The differentiated pricing strategy can help the platform improve revenue by setting a lower revenue-sharing ratio.
Authors: Junchang Li, Jiaqing Sun, Jiantong Zhang
Institutions: Shanghai Polytechnic University, Tongji University
Language: English
Subfield: Management Information Systems
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $1,207
OpenAlex ID: W4413881295